OTTAWA (dpa-AFX) - Canadian business software provider OpenText Corp. (OTEX, OTC.TO) agreed Tuesday to acquire EasyLink Services International Corp. (ESIC) for $7.25 per share in an all-cash deal valued at about $310 million, inclusive of debt.
The deal, approved unanimously by EasyLink board, is expected to close in mid to late summer 2012. However, it is primarily subject to approval by EasyLink shareholders.
'EasyLink has a unique and exciting opportunity to be part of a leading enterprise software company that is strategically aligned to capitalize on EasyLink's core global business,' EasyLink CEO Tom Stallings said in a statement.
The EasyLink board has determined that 'the offer from OpenText represented a significant premium.' The offer price of $7.25 per share represents a 23 percent premium to Eastlink's closing price of $5.90 on Monday.
Atlanta, Georgia-based EasyLink is the provider of cloud-based electronic messaging and business integration services.
The deal will enable Waterloo, Ontario-based OpenText to offer a best-in-class combined portfolio of cloud-based services. It will build upon EasyLink's portfolio of cloud-based on-demand and supply chain solutions and gain access to EasyLink's talented employee base, industry expertise and broad customer base.
Separately, OpenText also reported financial results for the third quarter, posting a decline in profit, reflecting lower gross margins and higher expenses. Both adjusted earnings per share and quarterly revenues missed analysts' expectations.
The company reported net income of $34.78 million or $0.59 per share for the third quarter, lower than $35.83 million or $0.61 per share in the prior-year quarter.
Excluding items, adjusted net income for the quarter increased to $59.24 million or $1.01 per share from $53.38 million or $0.91 per share in the year-ago quarter.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $1.16 per share for the quarter. Analysts' estimates typically exclude one-time items.
Total revenues for the quarter grew 11.1 percent to $292.35 million from $262.96 million in the same quarter last year, but missed fifteen Wall Street analysts' consensus estimate of $304.23 million.
License revenue declined 10.1 percent to $60.96 million, while customer support as well as service and other revenues grew from last year.
The company noted that license revenue declined due to sales execution issues in North America and within its Business Process Solutions group. The company added that it has moved swiftly to take corrective actions to make organizational changes and enhancements for a positive impact on execution.
Gross profit margin for the quarter contracted 290 basis points to 63.6 percent from last year.
OTEX closed Tuesday's regular trading at $53.44, down $2.55 or 4.55% on a volume of 2.0 million shares. The stock lost a further $2.31 or 4.32% in after-hours trading.
Meanwhile, ESIC closed at $6.36, up $0.46 or 7.80% on a volume of 1.07 million shares. The stock gained a further $0.81 or 12.74% in after-hours trading.
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© 2012 AFX News
